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tv   Bloomberg Markets  Bloomberg  May 4, 2016 12:00pm-2:01pm EDT

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scarlet: from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. alix: i'm alix steel. breaking news and politics right now -- john kasich will be suspending his presidential campaign, according to nbc news. we will have more on that in a moment. scarlet: stocks are pulling back once again as the dow ended on three-week lows. my new comment from fed officials. , seem to add on investors fear the market. alix: apple on track for its worst year since the financial crisis. we will talk with one analyst who says there is hope with iphone seven. scarlet: we are halfway through the u.s. trading day. let's get the set up here with bloomberg's julie hyman. julie: can i say the band is back together?
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scarlet: we are all back. julie: let's talk about what's going on in the markets. stocks are back toward the low of the session. near the bottom and they're not help with the next bag of data with a report that came below estimates with factory orders beating estimates. beating in thees u.s.. you can see that the major averages are not getting any solace from that. if you look at the s&p over the course of the day, it did make an attempt at a recovery in midmorning and then came back down again. it just about cut declines in half at one point. what is going on internally here? let's look at the groups on the move. energy shares of the worst performers along with materials, and financials, which were also dragging on major averages yesterday. utilities holding up well as we have seen natural gas prices fall and bond yields fall as
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well. i did want to dig further into what is going on with oil prices. we haven't seen a rally in oil until we got the weekly inventory number coming up in oil prices abruptly turned around, paring their gains. andaw sharp movement there sharp movement in energy stocks as well. here's the s&p 500 energy index . they are dragging on the major indexes. oil prices showing that the climate we saw. but are still higher, definitely a sharp reversal from where they were earlier. inventories are showing a larger than estimated build in inventories. we have been watching the production numbers as well, which continue to come down. this is g #btv 1191. here are the inventory numbers. this is the absolute level and here's production. production fell for an eighth consecutive week. a good sign that production is using to some extent in the u.s.. that inventory number just keeps going up, which makes it a
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little bit difficult year for oil prices to gain much traction. are also seeing declines in the market is in priceline, really taking it on the chin. the projected forecast missing estimates. julie: priceline is definitely example of that. it is coming out with that forecast and saying it is because of the timing of the easter holiday, but it also make some comments about global growth. this is a company that gets record as of its revenue from outside of the united states . priceline is feeling it, but you're seeing a ripple affect throughout the rest of the travel sector. booking companies are down today and airlines are also seeing weaknesses in today's session as well. it's not just because of priceline but because of these global growth concerns. delta and southwest and cruise line are lower in today's sessions. anything having to do with trouble is in the red today, ladies. scarlet: julie hyman, thank you
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so much for that set up on today's market action. alix: let's check in on the bloomberg first word news this afternoon. marquand and has more from the newsroom. nbc: as you just mentioned, news is reporting that john kasich will suspend his presidential campaign. john kasich will make a statement and co-op is, ohio at 5:00 p.m. local time. the campaign had canceled an earlier plant news conference at dulles airport. the statement comes a day after ted cruz dropped out of the gop presidential race following donald trump's indiana primary win. mr. trump is talking about unifying the gop. he has been called the presumptive nominee after that win in indiana yesterday. the victory forced ted cruz to drop out. uphough mr. trump has turned millions of republicans with some of his comments, today he says he is confident that he can unite the party. president obama a firsthand look today at flint, michigan, and it's tainted water supply. the president will speak
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to 1000 residents at a local high school. there was a state of emergency for months ago has of lead contamination in the water. officials have been charged in that case. global news 24 hours a day powered by our 2400 and journalists in more than 150 news bureaus around the world, i'm mark crumpton. alix: let's get more on this report that ohio jeff weiner governor john kasich is suspending his president of campaign. marty shanker joins us now. was this announcement expected? marty: actually last night after ted cruz exited the race, his campaign manager said they are staying in it till the end. he had a press conference scheduled for virginia -- canceled that. nbc news broke the fact that he is actually ducking out of the race. it is a mild surprise. scarlet: what you think changed between last night and today?
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marty: i would imagine a lot of the people who he is closest to and some gop establishment type said, jon, you should really just clear the field for donald trump. he is going to win the nomination. out of respect for the process, he probably decided it is best to just it out. alix: can we infer from that that republican establishment figures will now be lending their support to donald trump? marty: that is the key question. i do not think you can assume anything. i'm sure that donald trump would sike to have john kasich' endorsement, but that is what everyone of those republican establishment types are going to have to decide over the next weeks to the convention whether they will come out and publicly support the nominee. that is the key question. scarlet: to that point, the rnc chairman called for the party to unite behind donald trump as the present of nominee. -- presumptive nominee.
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do we look for ted cruz to come out and endorsed donald trump? do we look for john kasich to support the presumptive nominee? marty: again, that is a question that everyone of those people will half to dig inside of them and decide. his donald trump -- is donald trump an effective person to be running the gop or do they stand back and let happen? the other question is will these people show up at the convention itself? will they get speaking slots at the convention? these are all decisions that, trump ultimately will have to be -- donald trump ultimately will b have to be making. a lot of this is emotional and the day after donald trump essentially got the nomination. give it a few days and people may have second thoughts about whether they endorse him or not. alix: what kind of rhetoric -- or what do you expect the
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rhetoric of the truck campaign to change now that he is the presumptive nominee? marty: i do not actually expect that to change a lot. when donaldampaign trump decided to be more "presidential," he came back the very next day and said that does not work for me. he has a point. his populist style, his bravado is what attracts him to his base. i think he is not as effective being presidential as he is being donald trump. i would not suspect his tone to change a lot. scarlet: interesting. what about the democratic party? all eyes are now on sanders versus clinton. are we waiting for bernie sanders to bow out or will this go all the way to the convention? marty: if you are waiting for that, you will be waiting until the convention. he has made it very clear that he is going to stay in it. he is probably going to continue to make headway in various
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states that are still to vote. he has the money to do it. he wants his message to be loud and clear to the policy decisions at the convention for the platform. i do not think you will see bernie sanders dropout. carefulhas to be very about how she treats bernie because she needs that base. alix: what is the risk for the democrats that they have still yet to decide on their nominee whereas the republicans have clinched theirs? marty: the only thing it really does is give donald trump the ability to go after whoever is the democratic nominee. at this point, it's a must a sure bet that it's hillary clinton. hillary clinton has the basically -- to basically look to charge back at that. she has to also watch her rear flank with bernie sanders there. a complicates things for her and
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gives her a distraction, but she has experience doing this. i think she will do fine. alix: thank you very much, marty. scarlet: as we had to break, a quick check on u.s. stocks coming off session lows. those posting their biggest losses for the second day. with anspeak investor who likes bankshares next. ♪
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alix: you are watching "bloomberg markets." i'm alix steel. scarlet: i'm scarlet fu. as julie was telling us earlier, risk on is really on this week. we are talking about sentiment
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and exchange traded funds could nevertheless, bearish sentiment seems to rule the day. interestt shows short in the percentage of the u.s. stock market. alix: ask him off its recent high, but it is still extremely elevated, especially from the levels of 2011. it is the highest level that we have seen in the bull market. our next guest says he shares some of the negative sentiment. chris, what are you doing in the stock weakness we have seen? chris: three or four weeks ago, we started raising cash because things had some back -- come back so quickly. we only on about 15 to 20 stocks. we are sitting on about 25 to 30% cash and we are waiting. we think there will be better opportunities ahead then there are right now. scarlet: prices have changed a
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lot, but have conditions changed? when you think about it, central banks are still very much in a wait-and-see mode. china has gone back to prior closing -- prioritizing growth above reform. chris: i would say they are marginally worse than they were a few weeks ago. the rebound was because folks thought that we were dropping in terms of emerging markets. the pmi reports at the beginning of the month seemed relatively weaker than we thought. nobody can call recession. we just think that there is a meaningful chance of one so why russian right now. when he only own 20 stocks, you target very carefully. alix: you like energy. we spoke last week that you like devon. you also like refiners. going back to the wti brent spread. the oil prices kind of around zero.
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chris: i think that story is over, but refiners have had good stocks before 20 tell for 2013. we do not like the refiners any longer because we are very summer season the starting already that the inventory numbers for gasoline are starting so high. they added to capacity and is basically too much productive capacity. like his long-term stocks are even to be integrated. scarlet: let's talk about financials. if you look at them, their performance relative to the s&p 500, they just cannot seem to catch a break. we'll cut a chart that illustrates when the line goes up, you can see that financials are outperforming relatively to the broader market. they cannot hold to any performance. they have just rolled over. what part of the first quarter results made them more attractive to you but less
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attractive to the broader market? chris: first of all, i love coming on with the idea of you guys going what are you doing those? that means we are barking up the right tree because you are reflecting consensus. the consensus had also sold these stocks off. that is one of the things we find attractive. we think the reason for their underperformance is that investors are fighting the last war. they have vivid memories of 2008-2009 where financials not only had earnings go down that were in trouble of even existing the next year. we do not think that is a problem anymore. we think that memory is hitting the stocks too hard. when you buy a stock like morgan stanley or goldman sachs at 80% or 70% of their liquidation value, we think that is a great bargain if you have the stomach to hold it either through a recession. if there is not a recession, we will make the money soon. scarlet: are you looking at these banks as utilities are growth places? chris: there's no question at
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their worst business model than five years ago, but every business has a price for fo. for name brand like morgan stanley, name recognition is valuable. alix: what names are you liking now? chris: we like chevron a lot. these guys have really long lifetimes. -- cap x lifetimes. that will be coming to an end, but it will produce for much longer than these shale places. these really expensive products that exxon and chevron undoing, they have spent the money. the oil is going to come so they can lower their and make money at 40 or $50 oil for a long time to come. scarlet: thanks so much for joining us. alix: still ahead, is there hope for apple with the iphone seven? we will discuss with one analyst who says yes. that is next. ♪
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scarlet: this is "bloomberg markets." apple giving investors a wild ride, snapping it's a day slide. 6.83%, youmbled at can see there is a trough that the stock is reached. the biggest company still seems to spell serious decline. let us go now to abigail doolittle at the nasdaq looking at apple from a technical perspective. nowail: apple is down low nine for the last 10 days. lots of news out on apple, including the announcement that the company is planning big changes for 20 year -- it's one year streaming service.
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apple faces a daunting task to boost iphone sales in india. that at goes and away the companies very disappointing march quarter report last week that you alluded to, plus a below consensus june quarter consensus guide. it is what people are calling stocksk iphone sales to down more than 10% after those results. lots of volatility for apple. draw.quite a what are some well-known investors doing who are positive on apple? abigail: david einhorn of greenlight capital, a well-known hedge fund manager, says that greenlight capital continues to hold apple and he she's "amend this value -- tremendous value in the brand." buyers are supporting and defending the shares of apple, suggesting investors out there who do like apple. the question is whether or not the buyers at this point like apple enough to send the stock back up into a range or whether or not they will grow tired after strong selling pressure.
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if it is supported by perhaps the gas found out of those results, the possible exhaustion gap saying that apple could trade lower at some point in the future. scarlet: abigail doolittle, thank you so much for that set up on apple could alix. alix: despite all the negativity out there, there may be growing interest for the yet to be released iphone seven. according to a new survey from ubs, 40% of respondents in the u.s. were somewhat likely and very likely to buy the device. 55% in china versus 25% in the u.k.. the likelihood of buying and seven in those three countries. and analyst joins us now from ubs's office in new york. he has a buy rating and a price target of $125. >> i think investors are questioning whether apple's reached a new level of maturity.
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in the last 6-12 months, we have seen disappointments in terms of upgrades. of 6000 consumers in five countries suggest that the iphone seven is likely to see a great demand better than the s, but not a strong was the six. we are thinking 5%-10%. the days of 20% and 30% growth are gone by, but we do not think it is necessarily peak iphone . scarlet: do we know anything about the iphone seven yet? do we know what the features are? dualn: there's talk of a camera, but it does not appear on the surface to have dramatic changes, like the six that gave you the big screen phone. let's say it does not have significant new features. is there enough pent-up demand to see people moving? my guess is there probably is.
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i would like to see real future differentiation. we do not think that is likely, but there are still 200 million iphone users who have not gone to a big screen yet. we do think that potentially could provide some growth in fiscal 17. scarlet: including alix steel. alix: my hands are too small to have a big screen. i do not know what i'm going to do. what kind of price and upgrade cycle do you think is factored in right now and apple stock's price? steven: probably not too much. the apple stock price is not discounted too much good news. you are probably looking at flat or slightly down growth in fiscal 2017. what you should be looking at is the se. it is a great upgrade for those who have the five seed and it's relatively new technology. it will not so much attract new people in india. ,t is still too extensive but a third of the apple bases on the four inch format.
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that contributes to some potential growth in fiscal 2017 . scarlet: another big story was carl icahn has exited his position and apple. is it because he cannot get what he wants? abigail: he made $2 billion, which is not bad. steven: it was maybe not as much as he wanted. he said if the value apple as a pure annuity play what cosco, it would be worth over $200. who knows for sure why he really took the position down, but he did mention china. in china, revenue was down 26% last quarter for apple. china is two thirds of apple's growth. if problems continue to occur in china, it's going to be difficult for the stocks to dramatically rebounde. alix: as the peak iphone theme gains traction, do you think it goes the way of pc makers that lose relevance? steven: in our smartphone
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survey, we asked the question if the smartphone is going the way of the pc? we do not think so yet. the pc is seeing multi-your declines, even double-digit declines. we are looking for the market to grow 3% this year. look outl be down, but five years, and that is certainly possible. there is still 40%-50% of the world that does not have a smartphone. unfortunately, most of those people cannot afford an iphone today. scarlet: coming up, it's our mystery stock of the day and it might be better called a blind date. a heart alix: ♪
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worldfrom bloomberg headquarters in new york, i'm alix steel.
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scarlet: i'm scarlet fu. this is bloomberg markets. julie hyman has a check of the individual movers and our mistry stock. julie: investors are eating their hearts content. -- the spoiler alert from earlier on. earnings came in above estimates and revenue beat estimates largely thanks to tender, a , passingy that scored one million paid members. it also owns lot of growth came from plenty that itand tender, so affected their revenue per user, but overall, the revenue went higher. you can see how match has traded and today's gain put it above
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that price of $12. want to bring some headlines from the stone conference -- jim chanos, the sellerort -- noted short reiterated his short of alibaba and expanded in an interview, saying he is heading against china and says alibaba has no free cash flow and he is shorting the company for accounting reasons. lower. see shares moving but thate decline company reports its earnings tomorrow. he is talkingany about is valiant. he was expanding upon it in an interview on cnbc and said the pro forma on this company is misleading.
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these are reiteration's of shorts that he already has and he doubts bash and worth $8 million or nine billion dollars case,st expanding on his the shares selling off and now down by 3%. you for thatk roundup. alix: let's start with the headlines from the bloomberg first word news. mark crumpton has more from our newsroom. john kasich is ending his bid for the white house. the associated press and other organizations report kasich will suspend his presidential campaign. he is scheduled to make a statement in columbus, ohio, at 5 p.m. local time. nhe campaign had canceled a event at dulles airport. this comes one day after ted
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cruz dropped out of the race. the race isrs says not over. senator sanders surprised democratic front runner hillary primary.nd yesterday's senator sanders hopes to get some of her superdelegates to back him. the european commission is making good on its promise to stemming return for the flow of refugees, they are paving the way for visa free travel to europe. that's one recommendation they are making to eurozone countries. to a bigment has led drop in refugee arrivals. the latest snapshot of school safer schoola environment. still 3% of students ages 12 to 18 say they were victims of crimes at school in 2014. about 1.3 million students were least one fullt
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school day for alcohol violations, violence, or weapons possession. dayal news 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. presumptive republican presidential nominee, donald trump, is taking on everyone, especially mexico. that president has a lot to say about his rhetoric. sat down with them to send a fox and he shared his concern at trump's portrayal of mexicans. we have been offended by his language, but we are mostly worried about his thinking. his thinking in relations to trading and to the economy and how it works, his thinking about and imposing duty to
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import. this is something that happened in the united states 100 years ago. president hoover proposed the same policies, to tax people and limit the efforts of corporations to invest abroad to keep themselves competitive. the end result was depression. the depression of 1929 was the result of those policies. it is rhetoric for now and it is all hypothetical. is it government paying too much attention to that and not enough to issues going on in its own backyard? : in mexico, we think it is substance, so we better watch out and worry. that is why i have been telling people to wake up. he is a false prophet and he is
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proposing ideas that will not work. on the contrary, instead of saving jobs, they are going to lose jobs. that means 6% of the jobs to american citizens. for 10accountable million jobs were u.s. citizens. he is not presenting things in a right context. scarlet: isn't he a bit of a issues ofn against corruption scandals at home? in mexico? corruption,do have as anyone else. theit is derived from mammoth drug consumption in the united states. consume drugs or
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produce drugs, we just happened to be in between the mammoth consumer market in the north and the producers in the south. so, here we are with this big, big problem. raised 55el laws billion euros a year, which they use to corrupt and used to hire kids to work for them and used to buy weapons and ammunition here. decideted states has to whether legalizing drugs or implementing a policy to prevent drug consumption in the state because we are paying the price. scarlet: certainly, that is a big discussion to have but is corruption still endemic and that the drug cartels have all the leverage and call all the shots? fox: we do have degrees of
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corruption, no doubt. i cannot deny that. in my government, we have load onthe best information to the public. the main problem is the war on drugs that came to be because of the huge market in the united states. did the president miss his chance to boost the economy with long needed reforms on education? fox: the mexican economy is strong as never before. it has the same economic fundamentals. our interest rates are the same as in the states. it is very strong and very
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stable and that's why it is producing more investment and what you see today is more mexicans are coming back from the united states than the ones coming in. finally, the trend reversed because mexico is suffering. scarlet: let's talk about the work you are doing with a private equity fund investing in electricity and shale and oilfields. a deal with aubrey mcclendon? mr. fox: with many other people. this is very strong and has a great team and has operating teams across the board. yes,r oil or electricity, one of the companies we are
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working with is american energy partners that longs to aubrey mcclendon. that is a respected, reliable company and is by far the best team of people that knows how to championsthey are the of extracting the oil and gas. the revolution that will be extended to mexico. is the new field in mexico. mexico can produce the revolution that happened in texas and that happened in oklahoma, and it is about to begin. it will bring a very strong capacity to create jobs and a very strong capacity to invest in infrastructure. that was my
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conversation with this and a fox. tesla. breaking news on the company has confirmed to senior manufacturing executives will be leaving the company and according to people familiar with the matter, these are related to the delays and glitches with the model x even a tesla has said it is not about the model x. alix: and a scoop to bloomberg for this. to put this in perspective, we have five vice presidents that have left tesla this year. the biggest loss is going to be greg ray shall. he is basically the leader of car production. he helped to launch the model x .hich was delayed by 18 months he's staying until a replacement is found. he just says that he wants to take a break. tesla shares fell to
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their session lows, off by 3%. tesla will be reporting results later today as well. we are back more in a minute with bloomberg markets. ♪
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scarlet: you are watching bloomberg. i'm scarlet fu. i'm alix steel. this is your global business report. scarlet: more bad news for the british economy -- construction growing at the weakest pace in almost three years. adidas,bunker shot for the company looks to sell the gulf business. scarlet: and poland is open for business on a scoring a $574
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billion deal -- $574 million deal with mercedes-benz. in the u k, construction grew at the slowest pace with homebuilding bouncing back after hitting a 38 month low in march. scarlet: adidas may be giving up on golf. they are in talks for potential buyers of its golf unit, abandoning a business that is dragging down profitability. the ceo is cleaning up operations as he prepares to step down in october. he says the gulf market is not growing. >> we are not looking for the fastest solution, we are looking for the best solution. talksl start getting into with interested parties and we will see what the best fit for our company is. scarlet: nissan is recalling more than 108 thousand rogue small suvs in the u.s.
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the 2014 cars from through 2016 model years. there have been no incidents in the u.s. that there are similar hass in another car that malfunctioned. sender has promised to money to build and engine factory in the city's southwest. it's their first high profile foreign investment deal. bloomberg for our dictate where we provide context on issues of interest. arctic is warming twice as fast as the rest of the globe, melting sea ice and opening access to natural resources long stuck in deep freeze. you have commodities, fishing but there is a risk -- oil producers working in the region have encountered setbacks beyond pressed oil prices. bet on the shell
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alaskan arctic and lost. still, some big projects are going forward. the melting arctic ice which has happened faster than many scientists projected has opened shortcuts for trade. late summer ice covers 40% less of the arctic ocean than in the late 1970's. drilling, mining, and fishing have gone on for decades. it's thought to held undiscovered and technically oil and gas. only denmark and russia have made territorial claims. the arctic council also includes the u.s., canada, norway and finland. it has met for 20 years to hold off commercial and geopolitical conflict. here is the argument --
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environmentalists say the region should be protected from catastrophes like the exxon valdez and deepwater horizon oil spills. disruption -- it could disrupt traditional ways of life. advocates say can be done responsibly if investors take a long-term view, consult authorities and weigh the benefits against goals and develop common standards, but it is going to be expensive. the arctic needs $1 trillion in infrastructure for ports, rail, tods come energy facilities be sustainably networked into the global economy. that is your global business report. next, is building a stadium for the atlanta braves a good deal for anyone but the braves?
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alix: this is bloomberg markets. i'm alix steel. scarlet: and i'm scarlet fu. it is supposed to be a mutually beneficial relationship.
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--ies host teams to get some to get something in return. up with enoughnd revenue to pay off the debt on the new stadiums. just ask perl, mississippi. you can find the story in the week."erg business alix: great article. set the scene. how to defeat her team for the atlanta braves get there? guest: to understand why the braves are in pearl, mississippi, you have to unwind 16 years or so. suburb ofscruffy jacksonville, mississippi. there was not a lot of industrial -- every strip mall has a cash checking store. it is that kind of town. so in 2002, they want to get rid of this reputation.
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a stranger walks in the door and starts talking about baseball and asks the mayor if you want a piece. scarlet: that's a bad start. what did the city of perl think they were getting and what did they actually get? guest: the guy who walked in his ken bennett, this minor-league stadium dealmaker. he promised to put perl on the map and bring in revenue and shed this reputation. aat happened is perl is in worse place of used to be in. it has this dutiful stadium, but it has no way to pay for it. talk us through how this happened. moody just -- moody's just cut the city to junk. guest: they borrowed about 76 -- $76 million to pay for it. this was a deal with bass pro shop. this was a development with a huge bass pro shop and a stadium next door. whole thing cost $78 million.
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the stadium itself with $30 million. a sickly how they sell these as with all of these different revenue streams -- basically how they sell these things is all of these different revenue streams, the stadium will pay itself off and more. the city is technically not on the hook for anything. but where they get you is these details deep in the bond payments. if the revenues do not come through, the city has to make up the difference. backet: connect the dots to the atlanta braves. they have a track record here. i used to be a mental bond reporter and stadium deals are not news. professional teams always take advantage of towns. is the reality in the u.s. what makes the atlanta braves different is that they have done it that they have done a threat the minor league system and they with their single a
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team and the aaa team and, most recently, they have taken all of the things they have learned from these deals like have the city back the deficit or do the concession bills and that is what they are doing for their major-league stadium which moved to cobb county. , it a financial standpoint was also controversial as well. what is the lesson for other towns? guest: when a stranger walks in talking about baseball, show them the door. alix: you can read the story and "bloomberg businessweek ." it's a fascinating read. scarlet: also depressing. two senior officials at tesla are leaving due to delays in the model x.
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company did confirm they too are leaving. tesla says it is not about the model x but shares of tesla moved on this news. saying he isnos short tesla and solar city. short.eaffirming the he's also saying tesla will have to raise capital. left teslave now this year, really bleeding employees. this departures quite devastating as they try to launch the model three. rainet: you can see the train affect on tesla shares right now -- off 4.5%. ♪
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the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today! it is 1 p.m. in new york and 1:00 a.m. in hong kong. scarlet: welcome to bloomberg markets.
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from bloomberg world headquarters in new york, good afternoon. alix: here's is what we are watching at this hour -- stocks sliding for a second day. the selling comes after comments from federal reserve officials say an interest rate hike may occur sooner than anticipated. scarlet: adidas hits a bunker shot with its golf business. we will hear from its ceo. alix: donald trump emerges as the presumptive gop nominee. trump will now focus on hillary clinton. first, we want to head to the market desk. we have been following some of the individual movers, but give
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us a big picture look at what is coming. this is the biggest two-day selloff for the s&p 500 going back to early february. it has been quite some time since we have seen movement like this but it can be blamed on the same concerns that have been plaguing investors since the start of the year with concerns from global growth. that has been typical of what we have seen this year. to wiping out its gains for the year. part of the issue has to do with oil prices. we see oil come down sharply, thisng negative after morning's inventory report showed a larger than estimated build on inventory after production continued to slide.
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we are seeing stocks like schlumberger and anadarko pullback. we see a sharp selloff in other materials related companies, part of that due to a mammoth lawsuit being filed against the hp over the bursting of a dam in that country that led to the death of 19 people. we see the stock reacting there after we see weakness and commodities. surprise,ities, no are holding up. julie: that is the group that is the standout. some of the movers we are watching and utilities, natural are bucking the trend we have seen in energy and oil prices, up by better than 2%. a cooler out work -- cooler outlook.
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typically when bond yields go much of a decline but a little bit of a decline in that is the lowest level we have seen in a while. report comingment in weaker than estimated and services coming in better than estimated, so a lot of mixed data there. let's check in on the bloomberg first word news with mark crumpton live in the newsroom. john kasich is ending his bid for the white house. two people with the ohio governor's campaign tell bloomberg news john kasich will suspend his presidential campaign. he will make his statement at 5:00 p.m. local time. the campaign canceled a news conference at dulles airport. this comes after ted cruz dropped out of the gop race
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following donald trump's victory in the indiana primary. mr. trump says he's planning to exit more political contributions now that he is the likely presidential nominee. he told "good morning america" that he will probably take small donations up to the legal contribution limits. $44trump said he spent million of his own money so far. u.s. officials say an agreement has been reached with russia to syria the cease-fire in to the northern city of aleppo. the deal took effect at midnight damascus time. officials say they have seen a duty -- seen a decrease in violence but it persists in some areas. this follows an earlier deal to reaffirm the truce in the damascus suburbs. nato has a new supreme allied commander, the first -- the former top american general in
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the korea who said the western alliance must stand up to russia weapons toraine defend itself. he becomes the 18th supreme commander, a position formally held by dwight d. eisenhower. confronted with projections that airport security lines will surge the summer, the transportation security responding,on is adding the screeners, bringing bomb sniffing dogs to congested hubs and asking congress to increase over time. airlines have been raising concerns about longer lines as passengers in some airports have missed flights. global news 24 hours a day powered by our twin 400 journalists in more than 100 50 news bureaus around the world. i'm mark crumpton. back to you. undert: stocks are pressure today.
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our next guest says the pullback is just beginning and sees an .nitial report the: if we take a look at chart of the s&p, what kind of downside do you think we will see? around 2000. that has a psychological difference as a round number. that is realistic as a target for a correction. scarlet: what do you need to see as far as confirmation signals? short term, the pullback we have seen so far. it comes after a failed breakout . there's nothing worse than a failed breakout from a technical standpoint and that is what we have seen. momentums the loss of turned into an intermediate loss
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of momentum. clearly, it was quite overbought. alix: scarlet: i want to -- alix: i want to bring up the 50 day moving average. there.ike right right on the 50 day. what kind of acceleration to the downside can we see? guest: the 50 day is a great gauge. i think we can expect the same out of the s&p 500. as the breath of this move expands to the u.s., it's a loss of momentum. it does support downside follow-through. you have the cliche sell in may and go away. but basically people has said things are dead until after the presidential election. guest: people start to
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anticipate these seasonal moves. maybe that does contribute to it and it is certainly a real phenomenon. it suggest you come into the market around october after a low has been established. with that loss of short-term momentum with that seasonal issue. what do you do with the dollar index? we haven't seen that level since january of 2013. do we wind up raking below that channel? guest: i think we've already broken it and it is waiting for confirmation. waslevel i was watching 93.25. that's a significant breakdown of confirmed. you can imagine that means a
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much stronger euro. --rlet: as the dollar drip as the dollar drifts lower, we have seen an etf that tracks emerging markets -- you say that this is vulnerable to a correction. what kind of volume could we see? have: emerging markets shown strength over the past few weeks -- energy commodities, it's all related. i don't think anything would be left untouched by a broad-based collection -- rod-based correction. think energy stocks are vulnerable along with emerging .arkets thankfully support levels are only 5% below at this stage. what about for oil? of downside -- what is
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the support level at uc. support level do you see? isst: i do think it reversing trends and is in an uptrend now. the intermediate-term uptrend puts support in the high 30's. you cannot rule out a deeper pullback but it is just a pullback with that uptrend in place. the initial resistance i'm watching is in the low 50's, so that is the intermediate-term for wti. scarlet: let's talk about gold quickly. gold prices at or around 52 week highs. hasn't broken out definitively? guest: it has. that was following a bullish reversal we saw a couple of months ago. we have seen that followthrough and that solidifies that reversal. trajectoryive at a
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of that uptrend and i know that , as aa bit extreme projection, that is what we can derive from the chart. coming up next, adidas is giving up on golf. it plans to sell most of its golf unit and will start negotiations with potential buyers. we will hear from its ceo, next. ♪
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this is bloomberg
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markets. you are looking at a live stream run the milken institute in los angeles. erik schatzker is moderating a panel there right now. alix: you can watch it live on our live event channel at scarlet: it is now time for the bloomberg business flash. alix: terra-cotta has agreed to to 40 another 35 million million airbag inflator's. it's a stunning increase that thed more than double already largest recall in automotive history. it would bring the total number of inflator's replaced to 69 million. scarlet: two top manufacturing executives are leaving tesla motors, including the global head of production. this comes at a time when the company is about to release its most important vehicle. a spokesman says it's related to glitches that have plagued the
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model three. alix: bill gross is selling a portion of his stamp collection $4.5 million. he will donate half the proceeds to a nonprofit he has created. the bondmanage is fund, janus capital. . -- scarlet: that's a lot of complicated ties. alix: that's a lot of stamps. scarlet: julie hyman has a look at the stocks moving. tesla moving off of our story and also moving off of jim chanos, commenting in an interview. he had already presented and this was a preview of his presentation, but you can see tesla down 4% on that story that folks are leaving.
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jim janus says he's skeptical about the forecast. shares continue to move lower. a new position for him and all the positions he mentioned today were not new positions. tesla reports after the close of trading. solar city is another short he is reiterating today. solar citysees getting into financial trouble today. he talked about alibaba again, not a new short for this company forhe says he sure did it accounting reasons. it reports earnings before the opening tomorrow and he reiterated his short position in valeant. ares interesting that these reiteration's of existing positions, yet the stocks do appear to be moving. said bank of the
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ozarks is his pick for a short. the balance sheet may come under pressure and tank of the ozarks .s overly concentrated shares have since recovered to some degree. i have to tell you about a joke one of the presenters made. and early employee at facebook and venture capitalist, and owner and director at the golden warrior's says there is a multi-trillion dollar monopoly hiding in front of us in plain sight. but then he said it was a joke. amazon is the company he was talking about. scarlet: thank you, julie hyman. alix: adidas is actively seeking a buyer for most of its golf business, which is mostly comprised of the tailor-made brand. we are americans, so we
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go with the run dmc pronunciation. spoke to the bloomberg surveillance team earlier today. herbert: we have had a fantastic quarter, as we have seen and we said six months ago that we take the gulf business under strategic review. we are the number one driver on the golf course. we definitely are doing what is right for the brand mid-and long-term. we have completed our analysis and we are looking at the hardware business. francine: how important is it that this goes through before your colleague joins in october? we are not looking for
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the fastest solution, we are looking for the best solution. we will start getting into talks with interested parties and see what the best tip for our business is. tom: your performance is extraordinary. let's take a victory lap with adidas. what is amazing about this chart is that it is a logarithmic chart. you don't need to know fashion or celebrities, this is called minting money by any means. you have been at adidas almost 30 years. what is the secret sauce to the stock market performance? i believe we know sports inside out. our company drives and what drives our brand. we want to be the sports brand in the world and this is what i believe athletes and consumers really appreciate and this is
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reflected in our share performance. scarlet: that was herbert hainer on bloomberg surveillance. alix: with no opponents left in the race, donald trump is tasked with unifying republicans. how he plans to do that, next. ♪
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scarlet: this is bloomberg markets. governor john kasich is reportedly suspending his presidential campaign, clearing the way for donald trump. the primaryes after in scarlet: indiana forced ted cruz out of the race. scarlet:donald trump addressed mending a deeply fractured party. megan murphy joins us. how does our is it that donald trump secured the nomination before hillary clinton that? megan: everybody thought this was going to be a contested
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convention and now we see ted cruz dropout and now john kasich will be making his announcement later today, but no one would the possibility of a contested convention is on the democratic side. scarlet: do you think it's going to happen? megan: bernie sanders has been serious about trying to tackle a super delegates -- he won indiana and he's going into a favorable map where he could pick up many more delegates. he's not going to be able to close the gap. the map is just not there for him. this message of why are the superdelegates in states i have one are lining up behind her? alix: if he winds up picking up some superdelegates, does that make up any kind of dent in hillary clinton? megan: it would almost have to be a floor fight in philadelphia.
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you will have all of this talk leading up to the republican convention about unity. on the democratic side, the conversation is how can we prevent bernie sanders from losing to hillary clinton any further? whether he's going to do some real damage, she should have the advantage in early polls suggest at she does, but is he going to expose further wound before we get to the general? scarlet: chris krueger said that next president could be one of the oldest ever. what does this mean for their vice presidential tech? donald trump will presumably be doing just that in the weeks leading up to the convention. megan: donald trump has said he has picked ben carson to be part of his selection committee. people talk about hillary
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clinton playing the minority card, particularly among latino voters. especially given trump's comments about the wall and mexico. ae will certainly look for younger person to round out her ticket. with trump, very difficult. people think he will go with somebody in the military or with experience to round out the fact that he does not have any experience in government. they are coming at this from completely opposite sides. alix: i have read articles about people being on the ticket with trump and they say no, but others say how can you say no. megan: there's one thing everyone in washington wants, and that is to be in the white house. even people who were stopped trump,never,ever, never, once they see that chance of getting in the white house, they will get on board. scarlet: does that mean john kasich or marco rubio could be a
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possibility? with: i would be stunned either ted cruz or marco rubio, but john kasich, i don't think he is out. i say one thing and the complete opposite happened the next. alix: in terms of trump and his rhetoric, how does that change as he tries to unify the party? his of feet -- part of his appeal is his bombastic approach. one day he sounds presidential and one day he's back to the insults and name-calling. i think he's going to stay the way he is. bloomberg's washington bureau chief, thank you for joining us. coming up, the canadian oil sands engulfed inflames flames. we will discuss the implications, next. ♪
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scarlet: let's start with the
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headlines. it's the end of the line for republican presidential candidate john kasich. campaigne close to the say that he is ending his bid for the white house later today. the move just a day after the exit of texas senator ted cruz cements donald trump as the gop standardbearer and sets the stage for almost a certain secretaryainst hillary clinton in november. obama's getting a firsthand look at flint, michigan, and it's tinted wars of wide. to president will speak about a thousand residents at a high school. two state officials in one city official have been charged in that case here in public school teachers in detroit return to the classroom after a two-basic-out. -dayigan lawmakers -- a two
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sick-out. brady is getting more time to call his next play. lawyers for the new england patriots cornerback have been weeks to appeal. scarlet: "game of thrones" and donald trump have both spelled success for time warner. first-quarter earnings beat estimates. boost thanksrted a to the super bowl and increase political spending.
1:32 pm in paul there were all these concerns about cord cutting. are they showing up in the results? l: the most recent results suggest that it is something that will not up and the business overnight. seen from cable companies, like comcast, adding video subscribers in the last two quarters. it is kind of like a mixed bag. cbs and time warner reports of early death really strong results. affiliates continue to be a strong story. is it all about sports? paul: it is all across the board. in terms of advertising, that has been a real pickup in the
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last three quarters a national ad spending. timing is very good. and ratings, while they are down across the board for most of the networks, cbs is probably down the least and they were able to not -- to monetize that with advertisers. the folks who are tend not to switch out of traditional networks and go into perhaps skinny bundles. the ceo and chairman of cbs spoke with david of about networks pricing plan. we live in a 180-channel universe, which a lot of people do not want to pay for. so the skinny bundles will come more and more important on a lower price point. and people will get only the channels they want. complete 180 is a from what these network executives were say two years ago. it is all or nothing.
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paul: reality is really dawning on them as they see the numbers. their consumers are consuming more and more content outside of the traditional pay-tv bundle, whether it is netflix, which still sees huge subscriber growth. hbo is having some success. these media companies are starting to change the tune a little bit as they adapt to what is in fact a changing environment where consumers are consuming media differently than they did in the past. the challenge for these media companies is, no matter how they distribute their content, they have to get paid. , ever since ago disney reported that terrible quarter, it seemed like the death of media companies. where we now? is the demise of the traditional pay-tv bundle on which all the media companies
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depend so much, will that be a quick klein or a gradual play -- a quick decline or a gradual play overuse? -- over years? the companies that have ownership of broadband, like comcast, have a better position because they benefit either way. paul: right. with their traditional cable business, they are in fact adding begin subscribers. that seems to be stabilizing. but the real growth part of the comcast, traditional comcast business has been their high-speed internet subscriber business. that continues to add subscribers and continues to to be a greatnues growth story in terms of cash flow. scarlet: i was at the milken global institute -- look at institute global conflict -- the milken institute global conference.
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how much more can these networks pay for it? he says he does not believe these are maxed out yet. is there any indication from the network side that perhaps they are not willing to pay that much more? paul: every family said that in the past, they end up paying more and rates go through the roof. is we seeppening now consumers leave some of those traditional big networks, like espn, fox sports, the big networks that have been able to afford these ever-increasing rates. those businesses have declining subscribers, their ability to a these ever-increasing rates might impact the rates going forward. which impacts obviously the leagues and ultimately the players. alix: clearly, we don't have the money to pay guys. sorry. thanks so much. scarlet: a wildfire racing
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across alberta sends thousands of residents fleeing. is the livesdfire blow to a community already coping with then -- with an economic toll. what kind of impact will this have? let's ask david scanlan who joins us now from toronto. first off, what is the latest on the fire? it is quickly shifting from a wildfire, which has been devastating, to a city fire. this is not a small village. it is a town of 80,000 people. --are just getting reports it is hard to get in there, of course, because of the evacuation. but the municipality is giving us an update on the impact on various neighborhoods. 80% loss of homes. town has clearly been
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affected by this. 80,000 to looking at 90,000 people being evacuated which causes traffic jams all around the city. there are gas shortages. that is gravitating matters. it is a difficult situation right now. what -- how longest production take to get back up? david: it is not clear yet. canadian.the biggest about 80,000ng barrels a day. their operations are not affected. however, if people can't get to work, they can't produce the oil. and that is the issue now. alix: when it comes to clean up, how does alberta come to pay that when it is already in recession? david: it is a blow to the
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economy for sure. it will probably be in recession again this year. they are running a record budget deficit of $10 million. this will only add for that -- add to that as they pay for the cleanup. scarlet: those are unbelievable pictures. is goinglike the fire to engulf the highway. thank you, david scanlon. has the scent tech movement fizzled out before it caught on with investors? we will have some analysis. ♪
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scarlet: this is "bloomberg markets." alix: time now for the business flash. scarlet: nissan news recalling 8000 cars. there have been no incidents in hasu.s., but the rogue parts similar to those in another country that have malfunctioned. in addition to the online audience, buffett says roughly 40,000 people attended his event in omaha, nebraska. scarlet: the diamond the size of a tennis ball could go for $70 million.
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the diamond was unearthed in a mine in botswana. that.t mother's day. it is sunday, guys. get on that. [laughter] scarlet: let's head to the markets desk. julie: let's split it. there is no piece of jewelry that that would be comfortable on. alix: on your crown. julie: oh. [laughter] let's take a look at some movers today. if you're not going to buy your mother a tennis ball-sized diamond, maybe you can go to at sea -- to etsy. some progress on some of its growth metrics. the strong u.s. dollar is still weighing on its international
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business but that may start to stabilize. analysts have been estimating a loss of three cents a share. gross merchandise sales is still slowing. up 18%. it was up 21% require quarters -- the prior quarters. if you look at how the shares have done since the ipo, you can see they have been sliding pretty steadily. as we looked at how the stock is doing in today's session with hours, the after stock rose as much as 19%. so it has been coming down from those levels. other earnings related movers -- moversncludes
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in includes hain celestial. finally, zillow is another that we have been watching today. it is coming out with second-quarter forecast revenue, top in the highest estimates out there. so the shares are surging by 13% today. scarlet: thank you so much, julie hyman. revolution wasch heralded as revolutionizing the banking industry. but not so much. scarlet: so is this a sign that the fintech revolution is fading before it even got started? let's ask mike reagan. how competitive is the space? mike: lending club and on deck r the two public
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ones. but there are a hundred 60 online lenders. so it is a big space. it is financial technology and encompasses a lot of things. space, online lending, was really thought to be an area where the banks were going to be threatened by these new upstart connectingbasically borrowers with lenders, with investors, peer-to-peer. thee, it is reminiscent of original internet boom. obviously, there are great ideas, disruptive, transformational technology. ae problem is there is this rush of companies created to do
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it. it is unclear if the first movers, the first to go public, they are going to be the winners. it will definitely change things going forward. but there is so much interest in it right now that it is hard to determine who the winners will be. scarlet: for companies like on deck and lending club, publicly traded, what is the challenge? paul: it is peer-to-peer. peers on the borrowing side are still strong. on deck was up 37% year-over-year. it's on the other side, the other peers, the investors who buy these loans where the concern is concentrated. on deck was only able to sell about a quarter or 20 presets destiny 6% of what they originated, which is a lot less onn what people expected -- deck was only able to sell about
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what they originated, which is a lot less than what people expected. they originate a loan and sell for a gain of 5% to 7%. if they keep them on their books, it is more risky. to the concern of the credit cycle. especially the first quarter. it is hard to say this was just a blip. markets everywhere were sort of risk off everywhere. it is easy to see investors on the other end being skittish for this quarter. whether it is a longer-term problem, we will have to see in future quarters. scarlet: are any of these publicly traded companies profitable? paul: the revenue growth or is i had been astounding. that has flattened. on deck was about 11%. lending club report in a few days. we'll find out from them. the basically near that
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breakeven profit level now. mike reagan, thank you very much. scarlet: coming up, is the bank of japan running out of ammunition to stability its economy? alix: that conversation is up next. ♪
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alix: this is "bloomberg markets." a financial joe to -- a financial jolt heard around the world. we spoke with an economics professor at stanford university, specializing in japanese financial systems. we asked him if he thinks the
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negative interest for policy will work. >> the negative interest rate led to the reduction of the interest rate. the yield curve has moved down. and the mortgage rate has been dropping as well. so it's possible that these rate changes will lead to a change in people's behavior, say, more mortgage borrowing were companies reducing their cash balance or deposit balance. amtt: -- matt: at what point with the boj say this is not enough? how long would they wait to see the results of the negative interest rate policy? takeo: so far, the interest rate has come down and it seems to have stabilized. so now i think they will give the market a chance or the people a chance to change their behavior for a couple of months
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at least. how much needs to be done on the physical side? one view is that there's only so much the boj can do. there needs to be more done on the fiscal side. avoid hiking taxes. do you think that is correct? do both sides need to work together? or kent rothe get all -- or can kuroda do it on his own? probably more importantly, the japanese government should be serious about the structural reform with -- which increases the potential growth rate in the future. in addition to bank of japan going into negative rates, one thing that has been extraordinary about the boj stimulus is its purchase of etf's. -- there isy great a great report about how it will be the top 10 shareholder in naked to 25 companies due to its open -- ownership of these
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equity etf's. -- ou see o: i think it will happen on both sides. if the negative interest rates he .1%, if itt is not working, it is possible they will go into more negative region. and at the same time, i believe they will expand the etf-buying activity as well. joe: what about the yen? there is concern that, if it hits a certain level, that might be the point at which the boj is forced to intervene. how much anxiety is it causing the bank? takeo: i think a lot. the exchange rate is influenced by the future expectation of the inflation rate.
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even though the boj is not targeting the exchange rate, but it is an important index they are looking at. is joeow joining us weisenthal. everyone is so accustomed to the boj surprising people, that when there is nothing, there is a shock in the markets. joe: he made a great point. if you want to see if negative rates are working, you cannot immediately do something more the next meeting. you have to wait. and if they are working, that gives you some insight. it makes a lot of sense. alix: today, we will talking about another eco-fundamental, inflation. chart. a great tips etf is what you buy when you want to buy inflation.
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it finally looks like there are signs in the market that people think inflation might be coming and want to protect against it in another sign is derivatives, which protect against inflation, are getting a lot cheaper. but are we actually want to see it in the data? market versus events think it might be coming. scarlet: we will be asking that question later on today to the chief international economist. we will be getting his take later on. alix: coming up next hour, bill gross says the next step in big on extremist efforts may be helicopter money.
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alix: welcome to bloomberg markets.
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vonnie: here is what we are watching this hour. stocks trade down as the latest economic data paints a mixed excerpt for the united states. there are signs of weakness in the job market. oil is trying to get back on track while gold is dipped from its highs. the path to the republican nomination is now clear for donald trump. john kasich about two quit the race. before we get to the markets, more breaking news on politics. cnn is saying that john kasich is not expected to endorse donald trump when he formally suspend his campaign this afternoon. that will take place in columbus, ohio


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